Avoiding probate with estate planning
Carissa Giebel 4:34 p.m. CST November 30, 2015
I find that many people have misunderstandings on what probate is, what causes it, and how it can be avoided. For those who have taken the time to do some estate planning, many think their plan is going to avoid probate, when in actuality, it’s a plan that must be administered through probate.
Probate is the court process of administering an estate. In Wisconsin, a probate is required for estates that are $50,000 or larger. Through probate, creditors are given notice and paid, taxes are paid, and administration expenses are paid.
All probate assets are listed on an inventory filed with the court, and after an accounting is done and all expenses are paid, including administration expenses, the remaining assets are distributed to the beneficiaries named in the will, usually within nine to 18 months. If there is no will, the assets are eventually distributed to the deceased’s heirs at law, which would be first to spouse (but if there are children from outside the marriage, then the spouse might not inherit it all), then children, then grandchildren, and if none surviving, then parents, then siblings, etc. For any predeceased sibling, their share goes to their children (nieces and nephews). If there is a deceased niece or nephew, their share goes to their children (great nieces and nephews). Worse yet, if there are no surviving family members, the assets may go to the State of Wisconsin.
Assets subject to probate are those not titled in the name of a trust, those with no named beneficiary, and those with no joint owner. A probate does include all assets that are individually owned or owned as a tenant in common and those with a beneficiary listed as “my estate.”
A will names a person to administer the estate upon death. Instead of relying on a court to appoint a person, a chosen trusted person or professional company can be appointed.
Any assets with beneficiaries named are paid to the named beneficiaries. For those assets owned with another person as joint tenants, the surviving owner(s) becomes the new owner. These assets are not distributed under the terms of the will or trust, and are not subject to probate, which is why it is important to coordinate your estate plan with your beneficiary designations.
Probate is a public process, and all interested parties will get notice throughout the process of the proceedings, including the inventory and accounting. There is no privacy in a probate. If privacy is a concern, especially if someone is being disinherited, you might want to consider an alternative, such as a living trust, an irrevocable trust, or naming beneficiaries on assets, including real estate.
A living trust can be valuable if you are looking for protection for your beneficiaries, from divorce, creditors, bankruptcy, or other expenses, or if you like the idea of privacy and avoiding probate. If you are concerned about possibly losing your assets to the cost of long-term care, you may want to consider an irrevocable trust. A trust should also be considered if you have a beneficiary with a disability who might be, or might someday be, eligible for disability benefits.
As always, it’s important to seek legal counsel to help coordinate your overall estate plan and ensure that your wishes are being accounted for. Remember, it’s not always about the dollars you are leaving behind, but about the love and thought that goes into the preparation and protection of your legacy.